SEATON v. BABAD EK LLC (2026)

Order, Supreme Court, New York County (David B. Cohen, J.), entered July 3, 2025, which denied defendant EK Realty, LLC's motion to dismiss for lack of standing, unanimously modified, on the law, to the extent of staying the action pending a determination on a motion by plaintiffs to obtain permission to sue, nunc pro tunc, and otherwise affirmed, without costs.

Plaintiffs were required to obtain permission from the court before commencing this action against EK Realty.  A receiver or its agent generally cannot be sued absent prior permission of the court that appointed the receiver (see Collins v. Vickers, 296 A.D.2d 320, 321, 744 N.Y.S.2d 672 [1st Dept. 2002], lv denied 98 N.Y.2d 615, 752 N.Y.S.2d 1, 781 N.E.2d 913 [2002] ).  One exception to the requirement of prior permission is where the receiver or agent has acted ultra vires (see Leonard v. Vrooman, 383 F.2d 556, 560 [9th Cir. 1967], cert denied 390 U.S. 925, 88 S.Ct. 856, 19 L.Ed.2d 985 [1968] ).  Determination of whether a receiver's conduct is ultra vires turns on the scope of the receivership and the obligations, duties, and tasks set out by the receivership order (see Ariel Preferred Retail Group v. CWCapital Asset Mgt., 883 F. Supp. 2d 797, 817–818 [E.D. Mo. 2012] ).  Where the receiver is acting within the scope of its role, it cannot be sued without prior permission (id.).

Here, EK Realty, who was appointed manager of a commercial property, was acting within the scope of its retention when it allowed a new tenant to clear out an office unit formerly used by plaintiffs, including allowing the new tenants to dispose of the contents thereof.

Plaintiffs correctly point out that the failure to obtain prior permission is not jurisdictional (see Collins, 296 A.D.2d at 321, 744 N.Y.S.2d 672).  Therefore, the action should be stayed pending a determination on a motion by plaintiffs to obtain permission to sue, nunc pro tunc.

We have reviewed plaintiff's remaining arguments and find them unavailing.